Adaro Energy creates maximum sustainable value along our pit-to-power value chains to provide reliable energy and help build Indonesia. This is what drives us and is why we are so passionate about building a great company.
Dear Esteemed Shareholders,
The year 2017 was an enthusiastic year for the coal industry. We welcomed the stronger performance of the coal market by extending our full support to the Board of Directors for their strategies to maintain operational excellence and strong cost discipline throughout the company’s safe, efficient, and effective operations.
In 2017, the Adaro Group marked its 25 years of operations, within which it had transformed from a single-site coal mining company of one million tonnes into one of the most prominent contributors to the seaborne thermal coal markets developing itself into being one of Indonesia’s largest integrated energy producers. However, even though it has established strong footholds within the extensive integrated networks of its supply chain, the Adaro Group, led by its parent company PT Adaro Energy Tbk, keeps moving forward for more.
We ascribe the company’s persistent endeavors to keep growing bigger and better to the management’s ethos of being content but not complacent. While being grateful for the achievements attained thus far, the management has resolved to face challenges, capture the right opportunities at the right time and execute the right strategies in growing the business further.
The management also instills the same morale among the employees, encouraging them with the challenge to keep inventing meaningful innovations for maintaining efficient and reliable operations along the company’s vertically integrated business model. The excellent financial performance delivered in 2017 is a reward of such fortitude, which also took advantage of stronger coal prices. The company’s balance sheet continually strengthened with high liquidity and net cash position, which means it has an ample room and agility to weather market uncertainties and respond to new opportunities.
We applaud the Board of Directors for their achievements in expanding both coal mining and non-coal mining businesses. In 2017, Adaro MetCoal Companies successfully increased the production of semi-soft coking coal and the marketing team untiringly developed market recognition and acceptance for the product. Meanwhile, the power projects are progressing as planned and on track to start the commercial operations of PT Tanjung Power Indonesia in 2019 and PT Bhimasena Power Indonesia in 2020. We offer our full support to the Board of Directors in their endeavors to sustain the company’s strong operational and financial performance while continuing to strengthen the footholds for securing business sustainability.
Good Corporate Governance to Attain Company’s Objectives
We have made Good Corporate Governance (GCG) an integral part of our operations and we strive to enhance the application of such towards the highest level of compliance. This includes conducting periodical reviews and evaluations on the implementation of GCG principles to identify improvement options and necessary adjustments and ensure compliance with the prevailing laws and regulations.
We keep Adaro Energy’s majority ownership under an equal composition of a group comprising four major shareholders, as this arrangement provides a natural checks and balances due to the equal degree of control, ensuring that decisions are made in the best interest of the Adaro Group and its varied stakeholders. We also honor and continue to instill the Adaro Group’s core values of integrity, meritocracy, openness, respect and excellence that serve as the guiding principles for the employees’ behaviors at work and implementation of work activities. These values are complemented with a set of Codes of Conduct that specifies and guides the implementation of the corporate values and principles by establishing a set of standards of behavior in key areas.
In 2017, a policy that requires new members of Board of Commissioners and Board of Directors to attend an orientation program was issued. Recently, the Board of Commissioners and the Board of Directors also conducted self-assessment with a high level of accountability as an initiative to continuously improve their performance.
Changes to the Board of Commissioners’ Composition
The passing of a member of the Board of Commissioners and one of Adaro Energy’s founding fathers, Ir. Subianto, in early 2017 required us to make changes to the composition of the Board of Commissioners. Accordingly, Adaro Energy’s Annual General Meeting of Shareholders held on 26 April 2017 approved to appoint Arini Saraswaty Subianto as a commissioner of the company, effective since the closure of the Annual General Meeting of Shareholders until the closure of 2018 Annual General Meeting of Shareholders, resulting in the current composition of the Board of Commissioners:
• President Commissioner:Edwin Soeryadjaja
• Vice President Commissioner:Ir. Theodore Permadi Rachmat
• Commissioner: Arini Saraswaty Subianto
• Independent Commissioner: Ir. Palgunadi Tatit Setyawan
• Independent Commissioner: Dr. Ir. Raden Pardede
We have reviewed the Board of Directors’ strategic plans for 2018 and fully support its operational and financial guidance. We have strong confidence that the management has the ability to formulate and effectively execute the right strategies to maintain cost leadership and operational excellence, maintain and develop coal and non-coal businesses, and deliver excellent financial performance.
The Board of Commissioners is fully supportive of the Board of Directors’ determination to develop and strengthen all of the company’s business pillars in a sustainable and responsible manner to provide a competitively advantageous position in the long term.
We remain cautiously optimistic with the positive developments in the coal market, and it is our underlying thesis that the long-term fundamentals for coal remain intact. We understand that currently Adaro Energy’s business is still heavily dependent on coal mining and the expansion of its non-coal businesses is important for the company to ensure a more sustainable and resilient venture.
The Board of Commissioners fully supports the Board of Directors’ aspiration to balance the company’s involvement in the areas of economic development, social enhancement, and environmental protection. The management’s decision to tap into the power sector will enable the company to take part in the government’s initiative to increase people’s access to electricity and utilize its capabilities to deliver positive contributions to the nation. We especially praise the management’s endeavors for the communities surrounding its operational locations, for whom the company strives to enhance quality of life in the area through the implementation of a series of community development programs, which are refined from time to time to ensure improved outcomes. Lastly, we greatly appreciate the Board of Directors for the company’s strong commitment to minimize environmental impacts of its operations, and encourage them to maintain this, by adhering to the highest standards of environmental rules and regulations and when possible, doing more than what is required.
In closing, on behalf of the Board of Commissioners, I would like to congratulate the management and all employees for their conscientious efforts in growing Adaro Energy into a leading Indonesian mining and energy group.
We wholeheartedly thank our shareholders and stakeholders for their continued support for Adaro Energy.